Are you considering a career as a mortgage broker in California? With high earning potential, independence, and the flexibility to work with multiple lenders, becoming a mortgage broker in California can be an excellent career move. However, California is unique because it has two different licensing authorities, which can make the process confusing.

This guide breaks down everything you need to know, from getting licensed to opening your own mortgage brokerage in California. Whether you're a loan officer looking to level up or an entrepreneur aiming to launch a mortgage business, this article will help you navigate the California mortgage broker license process.

Why Become a Mortgage Broker in California?

✅ High-income potential – California has one of the highest loan values in the country, meaning closing one loan here is equivalent to closing two in lower-cost states.

✅ Independence – Owning a California mortgage brokerage means you control your business, build your team, and set your income goals. California is one of, if not the highest market share of independent mortgage brokers of all states in the United States, so you will already be entering a market that is use to using independent mortgage experts.

✅ Flexibility – Work with multiple lenders instead of being tied to a single company, giving your clients more options.

✅ Growing real estate market – California has more mortgage brokers than any other state, proving the demand and potential for success.

Understanding California's Two Mortgage Broker Licensing Authorities

California is one of the few states with two separate licensing bodies for mortgage brokers:

DRE - The Department of Real Estate

• Focuses mainly on real estate transactions.

• Requires a Real Estate Broker License to operate a mortgage brokerage.

• No net worth requirement, making it easier for those with experience in real estate or mortgage lending.

• Faster licensing process (6-8 weeks).

• Allows you to pay loan officers as 1099 independent contractors.

• Requires passing both the Real Estate Broker Exam and the NMLS SAFE Mortgage Loan Originator (MLO) exam.

Who Should Apply?

• Real estate professionals looking to add mortgage brokerage services.

• Loan officers with prior mortgage experience who want an easier path to owning a brokerage.

DFPI - The Department of Financial Protection and Innovation

• Oversees mortgage lenders, brokers, and consumer finance companies.

• Requires an NMLS Company License and a $50,000 minimum net worth in a business bank account.

• Longer approval process (around 9 months).

• More stringent compliance and financial reporting requirements.

• Can only pay W-2 employees (not 1099 contractors).

Who Should Apply?

• Those without a DRE Real Estate Broker License.

• Individuals looking to operate a large mortgage brokerage with employees.

How to Open a Mortgage Brokerage in California

Understanding the Difference between licensing with DRE & DFPI

MLO’s with a DRE Broker designation must complete all DRE education and licensing requirements as well.

Step 1: Meet the Basic Requirements

To get a California mortgage broker license, you must:

✅ Be at least 18 years old.

✅ Have no major criminal offenses related to fraud or finance.

✅ Complete the required pre-licensing education and pass the NMLS exam.

If you only want to be a loan officer (not own a brokerage), you just need to pass the NMLS SAFE exam and work under a licensed mortgage broker.

Step 2: Complete Pre-Licensing Education

✅ Take 20 hours of NMLS-approved coursework covering mortgage laws, ethics, and loan origination practices.

Courses can be completed online through NMLS-approved providers.

Step 3: Pass the NMLS SAFE Exam

✅ The NMLS SAFE Mortgage Loan Originator Test is required for both DRE and DFPI applicants.

The exam has a 55% first-time pass rate, so study thoroughly!

Step 4: Choose Your Licensing Path

• DRE License: If you have a Real Estate Broker License, you can apply through DRE and avoid the $50,000 net worth requirement.

• DFPI License: If you do NOT have a Real Estate Broker License, you must apply through DFPI and meet higher financial requirements.

Step 5: Register Your Mortgage Brokerage Business

✅ Form a legal business entity (LLC or Corporation).

✅ Obtain an Employer Identification Number (EIN) from the IRS.

✅ Open a business bank account.

✅ Register with California Secretary of State.

If applying through DFPI, you must show a $50,000 net worth in your business account.

Step 6: Submit Your Mortgage Broker License Application

If Applying Through DFPI, You Need:

✅ MU1 Application (Company application)

✅ Surety Bond ($50,000 minimum) – Costs around $750 annually, but can vary based on your credit score and existing origination volume.

✅ AML & Compliance Policies

✅ Financial Statements showing a Net Worth of ______ and depositing $50,000 into a new business bank account.

✅ Business Plan

✅ Registered Agent & Management Chart

DFPI approval takes around 9 months if your application is complete.

Step 7: Get Approved to Originate Loans

✅ Sign up with a Loan Origination System (LOS).

✅ Get approved to pull credit reports.

✅ Partner with wholesale lenders (start with at least 5).

✅ Set up accounts for DU, LP, VA, FHA, USDA loans.

How Much Does It Cost to Open a Mortgage Brokerage in California?

📈 Growing Your Mortgage Brokerage

Once licensed, scaling your mortgage business is key to success:

✅ Market Your Business – Use SEO, YouTube, and social media to attract clients.

✅ Network With Realtors – Build referral partnerships.

✅ Hire Loan Officers – Expand your team to close more loans.

✅ Leverage Automation – Use CRM and automation tools to improve efficiency.

Is Becoming a Mortgage Broker in California Worth It?

✅ YES! If you’re looking for a high-income career with independence and flexibility, becoming a California mortgage broker is a great choice.

With the right training, licensing, and marketing strategies, you can build a successful mortgage brokerage in one of the most lucrative real estate markets in the U.S.

Megan Marsh
CEO/ FOUNDER of Co/LAB Broker Concierge

In Case You Missed Our Previous Blogs & YouTube Videos..

Read Here: How to Build a Thriving Mortgage Company: Step-by-Step Guide

This guide will provide actionable steps to ensure long-term success in scaling your mortgage business.

Read Here: How to Build a Thriving Mortgage Brokerage: Compliance & Growth Strategies

This guide will help you in creating a solid foundation, mastering compliance, and implementing smart growth strategies in your mortgage brokerage.

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If you’re curious about how we can help you simplify your operations beyond what our videos offer and want to know how you can make launching or running your brokerage stress-free, the link below explains everything. No fluff, no “exclusive training” gimmicks—just a straightforward way to see how we work with brokers to take backend tasks off their plates. Check it out here: https://colablendingfranchise.com/book-a-discovery-call